tv Bloomberg Markets Americas Bloomberg May 8, 2018 10:00am-11:00am EDT
i am mark barton. welcome to "bloomberg markets." vonnie: an announcement from president donald trump due in hours. what will the president assad and how will oil react? jamie dimon tells bloomberg if the fed hikes rates faster than expected it could push 10-year yields the 4%. his take on the move to globalization and what it means for investors. that and more. we are 30 minutes into the tuesday trading session. julie hyman is here to tell us how the market is reacting. julie: \ not well as we await the iran decision.
we are definitely seeing a sensitiveterest rate trade where utilities are trading lower and financials are trading higher. the balance is to the downside. over the past several sessions, running up to this decision we had seen oil prices rallying on the supposition by some participants in the market in deed the u.s. would pull out. there could be nuance. will there be renegotiation of the deal? iran is one of the largest oil exporters, shipping 2 billion barrels a day from the country. when the president announced he would be announcing his decision at 2:00 p.m., oil fell off. something else to watch today,
continuing moves in the media industry. i think we have a chart of some of the media stocks on the move. perhaps. 21st century fox is rising after comcast is lining up financing for run at a buying the entertainment assets. they have an accepted bid from walt disney for those assets. we have various parties vying for the part of sky that fox does not own. and a lot of moving parts. acquisition might be contingent on the at&t time warner deal going further. we are seeing moved sharply higher in the wake of those jamie dimon comments that it could get to 4%. i am out of time. over to you. minutes away90
from the end of the tuesday session. investors are bracing themselves for trump's decision on the iran accord. investors are bracing themselves for the possibility of the snap election. the five-star movement and the anti-immigrant league. up with a come solution to the inconclusive results of the election 2 months ago. the president will have to sue the technocratic leader or call new elections. italy down on the fear that the outcome of the new election could be a populist the government. not changed,e yesterday being on holiday because of the may bank holiday. reaching an agreement to buy its rival.
it is a deal that transforms cicada into a trap drugmaker into the lucrative business of rare diseases. it represents a 60% premium. the acquisition would be the largest ever for a japanese top 10 of global pharmaceutical giants. a company called shell gas has agreed to sell its stake. shell has been selling assets globally to meet the divestment target of $30 billion. in shell little changed. yesterday they rose to a record high. they have been following the price of oil, which yesterday hit its highest level since
2014. the chief executive says turning around operations in africa and the middle east will be the biggest challenge of this year. on a comparable basis with the 36% drop in that region. i mentioned shares down by 3.2%. vonnie: we are counting down to 2:00 p.m. eastern and president on the iransion nuclear deal. oil right now trading just under $70 a barrel. we are joined by the bloomberg chief content officer. how many possible outcomes are there? there are many. ae market reaction is reflection on the lack of clarity on how definitive donald trump will be at 2:00. to be: allies will need
ready. we spoke to the ambassador to the u.n. who had been angela merkel's national security adviser. >> we think it is a good deal that prevented iran from having the bomb, so to speak. vonnie: if donald trump pulls out of the accord or puts a hold are inaccord, allies trouble. they have to come back with a response? marty: what will be interesting is the world will immediately pivot to see what iran's action is. if they want to work with the existing partners and take a muted response, i think that would reassure the markets. iran could also take a very aggressive approach. they could accelerate their nuclear program.
askedropean allies have donald trump to stay in the accord. he is full of surprises. even if he announces he is getting out of the deal, there are many different forms that could take that would allow that agreement to state in place with our -- stay in place with our allies. the sidet are agreements that have been taking place between americans and separately? it seems if enough time was granted a solution could come to the fore. forest johnson suggested as much. what are the side agreements? boris johnson, macron, all say this is the best framework we had to know
framework at all to keep the line.m program in bloomberg's this morning introduced another element to who monitorsut how compliance with the accord, the agreement would disintegrate that plan. there are a lot of moving parts. i think the world is just waiting until 2:00 to see exactly what he says. said his words would be to improve the handcuffs rather them.reak what would be beneficial for trump's perspective to lose visibility into what iran is actually doing? marty: that is a rhetorical question. i think he feels very strongly.
this is one of the most primary issues in his campaign. he has called this the worst deal ever, probably after nafta. he wants to stay true to his political base. it is hard for me to imagine donald trump coming out at 2:00 and not following through with his threat. he is a very unpredictable leader and he may not want to show his hand. he meets with members of congress and he may tell them what his plans are and that could leak out before the 2:00 announcement. vonnie: what came first, the iran decision or the 2 appointments? surroundedld trump himself with people who are like-minded. probably followed their arrival. jim mattis has been critical of the accord. he still supports us being in there. to stays advising trump
in, the counterbalance is more bolton. if donald trump speaks what he is going to do, it is guesswork, on my part and everyone else's. chief content officer here at bloomberg. let's check in on the first word news. inlor: are the second time less than two months the leaders of china and north korea have met. of talks in ays chinese city. kim wants to talk to president trump about mutual nuclear issues. it could mean he could ask the president to take simultaneous steps to reduce tension. the new york district attorney office is opening an investigation into accusations of physical abuse by eric schneiderman. 4 women have accused him of
violence. contests the claims but will resign at the end of business today. australia, the government will bounce the budget earlier than expected. 2020, billion surplus by australia's first since the global financial crisis. voters will get modded tax cuts and financial perks for those about to retire. global news, 24 hours a day on-air and on tic toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. mark: thanks, very much. his latest take on globalization. this is bloomberg. ♪
♪ mark: live from london, i am mark barton. vonnie: i am vonnie quinn. jerome powell says the market and the fed is on the same page. powell argued that the path should not be blamed for emerging monetary policies. continue told prove manageable for me's. perhaps, a word on whether emerging markets will be roiled? how can jerome powell speak with such confidence?
taimur: the trick is to look past the noise. agreementthe nafta and look what happened to mexico. the rise of the middle class, emerging market to emerging market trade, and technologies that are empowering emerging markets. in light of the fx market, we have seen a lot of movement. in the immediate term, when we get an iran deal for example, will markets react? will be more volatility. that is a central premise of our report. you will get more volatility. we think that can be a good entry point. far from being frightened of volatility, see it as the right time to come into markets for the secular trend they want to clear. rumors of the demise
of globalization are greatly exaggerated. aret of hedge fund managers cheering you on. what evidence do you have? taimur: the conventional wisdom is nationalism is winning. the rise ofxit, nationalist parties in europe, the withdraw from treaties and trade agreements. but when you look at non-banking flows, how much a global supply chains are driven by multinationals. one in five jobs is driven by global supply chain and digital transformation. the networks being created by companies in the content space and social networking space are linking the world together. the old flows of globalization are stronger than ever. have new trends that are
going to drive further globalization going forward. the strongest effect is em tem m trade.- em to e the network effect and the scale you can achieve this large technology companies means you will have a more connect did world. that is what long-term investors need to play for when they think of markets and investment opportunities. less i is top-down effective now? of sovereign decisions. you now have multinationals, you now have federal banks and regulators in other countries. you have city level actors. look at new york. lookave provincial actors, at spain and barcelona. of actorsomplex web
is deciding corporate debt prices, equity markets, real estate prices are set. city is onehe smaller part of the investment puzzle that investors need to untangle. mark: which leads to your view that investors need to understand their real exposures, which are often hidden. is that straightforward? taimur: it is not straightforward. happened we had many investors trying to scramble to find the few underlying exposures in the u.k. economy. you have a situation where europe is 50% driven by revenues europe.of the true exposure to a country and its geopolitical risk is hard to fathom. we are urging investors to think about the true risk and in a global context how to measure that. vonnie: how do you do that? looking beyond classic
indices and thinking of true exposures. the other big change is geopolitical risk is no longer something you look at in frontier markets. having political analysis embedded with macroeconomists, saying what other risks emanating from developed markets and how can we integrate that, that is completely new and now essential. cvs's? equities, bonds, when you're looking at sovereign debt, the sovereign does matter. if you look at the company on theown terms and not country and emerging market sovereign's sand. equities are increasingly driven by sectors and company level effect, not the country they are in. increasingly it is the city that
matters, not the country. kyoto andn, how japa tokyo are doing is very different. we have to leave it there. it is a great report and i would urge anyone to get their hands on it. taimur hyat. mark: still ahead, we are live in mountain view, california at the google develop conference. this is bloomberg. ♪
mountain view, california. we will be looking for announcements in a.o. i. what are you looking out for? we will see a lot about artificial intelligence. stage withing the its digital assistant which is on all of the android phones and they are trying to spread that too smart speaker and devices. we will look at how they will address the privacy and data collection backlash. probably speaking on the responsibility in use and trust in safety measures as well as trust around their ai. open aboutl they be everything that is coming? big show for developers. in prior years, google introduced their first assistant. and put out some big cloud
ai. they get granular later in the week. the keynote is more of a public show. this is the narrative they want to present. this is what we will see a lot of focus on. consumers and the public can trust google with their data and privacy. when itere is google comes to data systems? i know it says it is more secure and keeps information anonymous. when you compare google, facebook, microsoft, where is google in the scheme of things when it comes to data security and other factors that have become so important? >> experts have judged them pretty good as far as keeping data secure. they have teams on that. they have the biggest digital advertising business in the world. they collect data on location
is somethingd that that will be scrutinized. it is being scrutinized in europe is something that will be scrutinized. it is being scrutinized in europe and is likely to be coming under pressure in d.c. google will be concerned with how much consumers will be concerned about how much data they are rendering over to google. next step isous google trying to move more closely with its digital map. how is it going when it comes to that aim? >> we are expecting to see a lot of emphasis on augmented reality. technology where they can enter swipe digital images over the real world. that market has not really up.all the big tech companies are expecting augmented reality to be much bigger. google has mapping technology, so they can give a more granular and detailed vision of the real
world. something developers have been clamoring for. we will see emphasis on maps, tools for developers, and the possibilities of ar. vonnie: we will wait and see if there will be a big reveal. i guess that is not google's thing so much. ahead, a blast from the past. approach 3% as jamie dimon warns growth and inflation may push yields back to 4%. i will bring you that exclusive interview with the jpmorgan chief executive. this is bloomberg. ♪ retail.
under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. oh hi sweetie, i just want to show you something. xfinity mobile: find my phone. [ phone rings ] look at you. this tech stuff is easy. [ whirring sound ] you want a cookie? it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. vonnie: live from bloomberg world headquarters in new york, i am vonnie quinn. i am markondon,
barton. let's check in on first word news. the state of the iran nuclear deal is in president trump's hands. the president will announce if the u.s. will stay in the agreement at 2:00 p.m. eastern. he has called the deal the worst deal ever. that it doesn't do enough to address iran's ballistic missile program. sounded theeaders alarm over the west virginia senate primary. they are worried about a surge by don blankenship. he has served prison time and has launched racist attack's on mitch mcconnell's wife. in armenia, the opposition leader who led weeks of protests has been elected prime minister. supporters hope he can do some
thing about widespread corruption and poverty. the republican party that he opposed keeps its majority in armenia's poverty. in the u.k., home prices plunged 8% according to halifax. values dropped 3.1% to an average of $299,000. the british housing market has been cooling off, and london has seen the sharpest slow down. global news, 24 hours a day on-air and on tic toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. mark: jpmorgan chief executive jamie dimon says it is possible the fed may raise rates further than many anticipate. it would be wise to prepare for 4% yields. bloomberg in an
exclusive interview from the china summit in beijing. >> someone asked me about what are the odds of a recession? 100%. the question is when. the american economy is strong. more people are going to housing is in short supply, a the economy. capital markets are wide open. there is less leveraging than in the past. it looks like 2007. banks have twice the capital and liquidity. the way to recovery is look beyond yeild. we at 20% growth over nine years. nine years is good, 20% is bad. it should have been 40% over a shorter time. a looks like this may have ways to go, maybe one year, two years, maybe more. the rest of the world is doing better. japan 1.5%.
1.5%, approximately. it is 1.5%. that is a positive. i hope it will continue. is in good chain. then you have regulatory reform, some benefit of tax reform, hopefully that will drive growth better than 2%. >> after the quarterly earnings come you said one of the biggest risks is underestimating the potential of the fed raising .ates more aggressively inflation could rear its head. we had oil above $70. is this a worry? >> yet prepare for all possibilities. there is the possibility that inflation accelerates. fed raises rates more than you would expect. in my opinion that might force it up, not down like in the
past. if it is because america is strong and healthy, it looks more like normalization. by the end of the year the fed plus the deficit passes 400 billion and a quarter. that is a lot. eventually the other central banks in the world will reverse buying bonds. that may lead to more volatility and higher rates. we never had qe or a reversal. that is moreg, important. the financial markets are one thing. they fluctuate, move, rates go up and down. what matters to most of the world is jobs, wages, stability, the economy not necessarily the markets. vonnie: jamie dimon in an exclusive interview with bloomberg.
we are joined for reaction and more bond market talk. by the chief u.s. rates strategist. 4% yields possible and when? it on think mr. dimon hit the head when he said there is a probability distribution around what might happen if we have accelerating growth and the fed stays easy. you could get potentially higher bond yields. that is not our base case, but it is a possibility. then you have another camp. when you look at what the folks at pimco are saying, for example, they are thinking 10 year yields will probably stay where they are. look at things like two-year notes and will two-year note yields rise a whole lot more especially with the fed getting more hawkish with higher inflation? do your treasury
yield forecast suggest will happen to the curve? will it flatten further? flattening is more likely to happen than anything else. we are not convinced we will see 10-year5% on treasuries, but with the fed continuing to hike the curve will continue to flatten. two-year versus the 10-year, another 30 basis points a flattening over the course of this year and getting to zero year. that is the environment where you can see the tipping point in the economy. when the curve gets flat, that is a worry for many that the economy could be headed for slow down. that is why you don't necessarily have to region that 4%. vonnie: do you remember a time -- differentet
do differentcurve things. they are not in consensus anywhere? is not one consensus, there are several all over the place. that is the result of a little bit more uncertainty than we had to are three years ago when it looked like everything was moving up. some are saying because we had such a long recovery that may be at his for a slowdown. this is the camp we are in. the recovery will continue but the federal reserve will keep hiking. usually you don't see significantly higher long-term bond yields, but you do see higher short-term bond yields. that is when you get the curve flatten. that play any role in high yields, or is that separate?
ira: it does play a little role in higher yields, especially with demand from foreigners not supplyg up with the of treasury securities. that goes into some of the pricing, particularly on the front end of the curve. a lot of foreign reserves are managed in two-year and three-year notes. that is where the treasury department has been increasing issuance the most will stop you can see yields in the two-year and three-year securities climb. it will be interesting to see what is the demand from non-dealers in the auction at 1:00 today. mark: if the curve flattens more than markets are currently pricing, could 2019 see the end of the rate hiking cycle? : i think it might. one thing we noted is the policy mistake the fed seems to make is to zero the fed
continues to hike because you have another quarter of growth. it is that pushing on a string with curves flatten and inverting that the fed makes a mistake. maybe they won't make that mistake this time and 2019 could see an end to hikes as the curves pancake. next hour, the business of the quality. accenture north america ceo on making the workplace more diverse. later today, an interesting conversation. we are speaking about markets of laszloounder birinyi associates. ♪
vonnie: live from new york, i am vonnie quinn. mark barton. you are watching "bloomberg markets." a look at some of the biggest business stories in the news. shares of virgin rising. the bank backed by richard branson has received an offer from cyb g that values it a 2.2 billion dollars. virgin money is the so-called challenger bank, a small recently created bank that uses technology to distinguish itself from more traditional banks. has stepped up his campaign to shake up zero x. xerox.ll consider -- up
call to thed their chief executive to resign. that is your latest bloomberg business flash. vonnie: bloomberg is hosting a business of a quality summit, bringing together business, academic, political leaders, nonprofits, and activists to discuss the future of the quality. total gender equality by 2025, what does total gender equality mean? over 400,000 people. 2025, we will be 50-50 men and women globally. vonnie: at every level of the organization? it wille already have
pay. we took steps to the in place so we have ongoing monitoring. we have long passed the question of equal pay. that scenario, you need to make a decision as a company you are going to do it. have seven years. i am curious, is it difficult to do? all of these companies, every fortune 500 company, every company in the ftse 500 needs to be doing this. it makes economic and financial sense as well as being morally right. but itit is difficult, is about is it your strategy? five years ago we strategically decided to transform our business to be a business of digital cloud and security. we doubled down on diversity because we felt to be an innovation-led company you have
to do that. we are over 55% digital cloud and security. we started at less than 20%. it is a business imperative as well as an important thing to do from a social and corporate responsibility. you: in your report, identify key drivers to closing the pay cap. one of the findings is most likely to improve the advancement of women would also benefit men. that combats the assumption that overone group can advance the benefit of another. did that finding surprise you and can we learn from that? thing we are focused on is that diversity, everyone talks about diversity and inclusion. inclusion has to mean everyone. that research to --
deliberately looked at if it would affect men as well. the factors make a lot of sense. companies that follow the blueprint in our research have something like 90% employee satisfaction, 90% of employees that s buyer to leadership. women are five times more likely to reach senior manager director and men are 2 times. it provides a blueprint for companies who want to get started. everyone needs to. make it a bit easier by leveraging the experiences of others and focusing on culture. report focused on larger companies. is it relevant to small and midsized companies? we did the research across different sized companies.
we did find it is relevant to all companies, which was part of the exciting -- it was focused on larger companies, but the research crossed different sizes. and has doners great research, so has and has e great research, so has mackenzie . through your own research, what have you realized you needed to change without ever having thought of it before? julie: the latest research was different. it was about culture. leadership and program were obvious. the third cluster, how does it feel to be at work every day? things like having a flex time program not just available but used by men and women was a hugely important factor to how women felt coming to work and using it. the focus on what is it like to be at work every day, and not
simply what are the special programs you put in place, is really important. it was our instincts, but the research was clear that is as important. you have to do it in combination with great leadership and policies that help the different diversity categories. me too movement and all of the revelations that came help thedid that conversation or movement in any way? julie: any time you are having a dialogue, that is important. in business, more important in moving the needle is disruption in companies. optimistic about the change. leaders are recognizing the leadership teams that got them to where they are are not the ones going forward given the amount of disruption from technology.
entire industries being turned on their head. we are seeing in the business recognizet that ceo's this strong business imperative. while i think that conversations this year are very important contributions to the dialogue, it is important we recognize there is a real driver for this change in the business environment. vonnie: word of advice for someone who may be starting off or are in middle management and want to get to where you are? julie: you have to learn. every quarter i set a learning curriculum for myself. education doesn't stop when you graduate from college. today's leaders have to be continuous learners. vonnie: thank you. julie will be part of the discussion at the bloomberg business the quality summit. you can watch the whole thing. go to the live go on your
vonnie: a high-stakes battle involving the biggest names in media takes another surprise twist. a bid foruld make fox, potentially upending disney's agreement. rich, thank you for joining. what do you make of the latest development? in a difficult position. they are faced with a programmer who is about to get much larger. disney buying fox. it is not good for a distributor like comcast. fox and skyed with overseas. the last just peace being removed from the board. comcast, you don't want disney getting bigger and hurting you. away fromo diversify
the slowing u.s. cable business. this is the only asset you can go after. there are not a lot of other places for comcast ago. this is a must bid if you are comcast. you will have to bid all cash to beat out disney's stock bid. and fox wants disney to buy it. how do you get past that? is there money that would change the murdoch's mind? shareholders are rational at the end of the day. given the at&t-time warner and thataving the visibility happened there, now we have better visibility on how that plays out. six months ago, you were surprised by the government lawsuit. you were looking at disney stock
versus comcast stock knowing disney was going to protect you by paying a breakout the -- breakup fee. it seemed difficult for the murdochs at the time to choose anyone but disney. now, not only do you address the currency, if you don't like comcast stock we will pay you cash. notmedia industry, it is exactly like it is bright lights and everything is great going forward. there is real pressure on the legacy media industry. getting cash, i think they will listen to them. if the numbers big enough and all cash, i don't think there's any way you look past it. mark: talk to me about synergies. fox sky orer, disney
comcast fox sky? rich: they talked about $2 and onein cost savings billion in -- you have to believe those numbers are larger because comcast is in the distribution business. comcast cable has significant synergies with sky across three countries in europe. if the number is 3.3 billion for disney-fox-sky, you are looking at 4 billion plus for comcast with fox and sky. the synergy opportunity seems larger on the comcast side. mark: let's get to the end game. who gets what when the dust is settled? rich: the challenge here is disney has never been in a bidding war. when they bought abc, pixar,
marvel, lucas, they haven't had competition. comcast has been in lots of bidding wars. yarder, at&t broadband, comcast is used to battles and disney is not. an they willing to go to all-cash bid? would they lever up? this isney really need the question. we know comcast really needs it. vonnie: we will get the bob iger later on. thanks to rich greenfield. coming up,iger joins. this is bloomberg. ♪ mom, dad, can we talk?
>> this is the european close on bloomberg markets." mark: here are the top stories we are covering from the bloomberg and around the world. just hours from now president trump announces his decision on the iran nuclear agreement. it's called the worst deal ever. what will his announcement mean for oil prices? a 62 -- $62 is billion deal with a much larger rival. eighte yourself, they see 4% yield and potential rising volatility. have a look at what's happening to equities today. it's a mixed day ahead of the trump announcement. trump